Talks with G4S about a financial settlement following the security firm’s Olympics fiasco have accelerated, Sky News understands.
3:51pm UK, Wednesday 19 December 2012
G4S boss Nick Buckles endured a tongue-lashing from MPs over the contract
By Mark Kleinman, City Editor
The company at the centre of the summer’s Olympics security fiasco is close to a deal with the Games organisers that would involve it incurring a smaller loss than the City had feared.
I have learned that G4S, which was widely-ridiculed over its handling of the most prestigious contract in its history, has made substantial progress on reaching a financial settlement with Locog, the organising committee, in recent days.
People close to the talks said it was conceivable that an agreement between the two sides could be announced before Christmas, although they cautioned that it was more likely that the negotiations would drag on into the new year.
The deal between G4S and Locog is expected to see the security company making a loss from the contract of between £55m and £70m, according to insiders. The final number is not yet nailed down and will depend on the progress of further talks in the coming days.
Nick Buckles, G4S’s chief executive, said in August that the company expected to incur a £50m loss from its involvement with the Olympics.
“The talks are focused on a deal that will mean G4S makes a larger loss than it has publicly acknowledged so far, but it will not be on the scale originally feared,” one insider said.
A settlement on these or similar terms would be regarded as a positive outcome for G4S. Chairman, John Connolly, has stepped in in recent days to take charge of the discussions with Locog, according to insiders.
G4S failed to supply more than 10,000 security staff to help police the Olympics and Paralympics, resulting in thousands of military personnel stepping in to make up the shortfall.
News of the impending settlement comes weeks after Sky News revealed that the Home Secretary could be asked to intervene to help resolve an impasse between them.
The security contractor has hired Herbert Smith and Linklaters, the City law firms, to help thrash out a deal, while Locog is being advised by Freshfields Bruckhaus Deringer.
The negotiations between the two sides follow the departure of three senior G4S executives who were involved in managing the Olympics contract.
On Tuesday, Mr Connolly appointed three new board directors, including Adam Crozier, the boss of ITV, to accelerate the overhaul of the company’s boardroom.
G4S declined to comment. A Locog spokeswoman said it was “continuing to seek resolution with G4S”.